GM CEO sees U.S. auto market flattening, but room for growth

By Ben Klayman and Joe White

DETROIT (Reuters) - General Motors Co (GM.N) Chief Executive Mary Barra said growth in the U.S. auto market will flatten out this year, although a strong economy and falling gasoline prices should sustain demand.

Barra, meeting with reporters on Thursday after a turbulent year dominated by a scandal over safety recalls, said she is "cautiously optimistic" about 2015. She cited strength in the United States and China, and said GM will have to adjust to "twists and turns" in other markets, including Europe.

Barra also said she still expects GM Europe to return to profitability in 2016, a bold stance given U.S. rival Ford Motor Co (F.N) last autumn cut its outlook for the struggling region due to steeper losses in Russia.

"We remain committed to the mid-term targets that we've set," she said.

In 2013, Barra's predecessor, Dan Akerson, said he thought that GM could cut the price of the second-generation Chevrolet Volt by up to $10,000 while still making the car profitable. Asked on Thursday for an update, Barra would only say that GM has made "substantial improvements" on the new Volt, which will be shown at the Detroit auto show on Monday.

Barra said the No. 1 U.S. automaker expected 2015 industry sales in the United States, the world's second-largest auto market, to finish at 16.5 million to 17 million vehicles, indicating flat to 3 percent growth. Barra said she expects 2015 U.S. sales will end "right in the middle of that range."

In China, GM's largest market, Barra said GM's performance was "very, very strong" in 2014. GM improved sales in China by 12 percent in 2014 compared with the prior year, outpacing 7.5 percent expansion for the Chinese auto market overall.

The stronger U.S. dollar could be a challenge for GM "in certain circumstances," she said. "We have to work with the tools ... and levers we have."

In the United States, which contributes the bulk of GM's profit, Barra said there was still room for growth because of the strong labor market, recovery in home prices and the recent drop in fuel prices.

U.S. industry sales rose about 6 percent last year to 16.5 million vehicles. Coming out of the recession, U.S. industry sales grew more than 10 percent a year from 2010 through 2012 and about 8 percent in 2013. The industry last reached 17 million in annual sales in 2001.

(Editing by Lisa Von Ahn and Matthew Lewis)